Context: According to the government, the new Bills passed by Parliament attempt to make it easier for farmers to sell to and produce for the private sector. The hope is that liberalising the sector and allowing greater play for market forces will make Indian agriculture more efficient and more remunerative for the farmers.

• In this context, it is important to understand some of the basics of Indian agriculture.

Key Facts

• Agriculture’s contribution to national output: At the time of Independence, agriculture and allied activities accounted for around 54% of India’s national income. As of 2019-20, it is less than 17% (in gross value-added terms).
• Employment in Agriculture: the proportion of Indians engaged in agriculture has fallen from 70% in 1951 to 55% in 2011. The Committee on Doubling Farmers’ Income (2017) observes that the dependence of the rural workforce on agriculture for employment has not declined in proportion to the falling contribution of agriculture to GDP.
• Proportion of landless labourers: It has increased from 28% (27 mn) in 1951 to 55% (144 mn) in 2011.
• Size of Landholding: 86% of all landholdings in India are small (between 1 and 2 hectares) and marginal (less than 1 hectare). The average size among marginal holdings is 0.37 ha.
• Terms of Trade between farmers and non-farmers: It is the ratio between the prices paid by the farmers for their inputs and the prices received by the farmers for their output. If the ToT is less than 100, it means farmers are worse off. ToT rapidly improved between 2004-05 and 2010-11 to breach the 100-mark but since then it has worsened for farmers.
• Geographical Disparity: Some of the most populous states like Bihar, West Bengal and Uttar Pradesh have very low levels of income and very high proportions of indebtedness. And even the relatively more prosperous states have fairly high levels of indebtedness.